Session Merchandising

8/12/2019 Session Merchandising

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Madhumita Mohanty

Merchandising & Buying


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ROLE OF MERCHANDISING

A Merchandisers/Category Managers role in a Retail

organization is akin to a product managers in a

FMCGcompany.


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CATEGORIES IN RETAIL

Staples / Groceries

Processed Food

Beverages/Drinks

Personal Care

Non Food/ Cleaning

products

General Merchandise

Fruits & Vegetables

Dairy

Ladies wear

Ethnic

Western formal

Western casual

Mens Wear

Formal

Casual

Semi formal

Kids wear

Infant

BoysAge group

Girlsage group

Food retailApparel


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CATEGORY MANAGEMENT

Definition

The process of managing items in a product category as a

Strategic Business Unit by determining

pricing

merchandising

promotions

product mix

based on category goals, the competitive environment and

consumer behaviour.


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CATEGORY MANAGEMENT

Category consists of a group of SKUs addressing similar

needs of the consumer

Products in a category should be inter related or substitutable Role of logistics/ storage while grouping in a category

E.g.- Processed foodaddresses need for convenient and

fast food

Name is often self explanatory


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THE 2 WORDMANTRA

SALES

RUPEE GROSS MARGIN a.k.a RGM


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SALES / MARGIN PLANNING

HISTORY

CURRENT AFFAIRS

GEOGRAPHY

MATHS


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HISTORY

Why is History important ?

Unless the past is known, the present cannot be

understood or future predicted


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CURRENT AFFAIRS

Knowing how the category / store / product is behaving

Knowing what factors impact sales

Knowing what are the trigger points


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GEOGRAPHY

Whether weathermatters !

Who is your Neighbour ?

Who is planning to be your Neighbour ?

What is the topography ?


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MATHS

Know yourMathwell !

Constant requirement : Analyzing past data to

predict future trends

present requirements

Gap analysis

Comparative Analysis


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Numerical & Analytical

Negotiation

Interpersonal

Decision Making

Quick & Smart Thinking

.. Lastly the most uncommon trait of all

COMMON SENSE !

SKILL SETS


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NEGOTIATION

is the most important word in a Merchandisersdictionary !

He / She is forever negotiating for

CostMargin

Promotions

Trade loads/ QPS

Display Income

Credit period / Payments

Stocks returns


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Space Planning


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Space planning

If there is something more precious than stock in a retail store, it is

space to stock the stock !!

Defined and limited space with pre-fixed # bays, fixtures, display units

Different SKUs have different rate of sale

Defined delivery schedule to storeeither from supplier or from DC

Limited and fixed BOH

New product introductionsfast and furious ! Customers like to find what they want right away !

How to plan for the right space allocation ?


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Spaceplanning


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PLAN-O- GRAM

Definition: Plan-O-Gram is a map of the category as

represented in the store. It gives the position of each SKU in

the store.

Purpose:

Ease of shopping

Ease of display

Aesthetics

Tactical benefits


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PLAN-O- GRAM

Planograms differ significantly by retail sector

Supermarkets largely use text and box based planograms

Apparel brands and retailers are more focused on presentation

and use pictorial planograms

POGs can be of various types

Sales enhancing

Margin enhancingSeasonal

Promotional

Store specific or cluster based


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Blocking and adjacencies management are criticalget rights

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Adjusting allocation of space betweencategories while maintaining the brandimage is a key opportunity area

Grouping the right products together in a

logical and customer friendly manner isvital

Better blocking removes confusion andhelps the customer find what they arelooking for

It also makes the store moreaesthetically pleasing and drives returnvisits

All ti th i ht t f h lf


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Allocating the right amount of shelf space can meanthe difference between Wasted product and LostSales.

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Space allocated to each product hasto be optimized across the availableshelving and depends on

The Pack Size of the productThe Case Size of the product

The Sales Rate of the productThe Replenishment Rate of theproduct.

Assign too little space and the

product will sell out.

Assign too much and you may endup throwing it away, while anotherproduct sells out.


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Where you put the product on the shelf isimportant

Because shoppers are not all the same


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Traditionally Retailers have tried a One Size Fits AllApproach

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One size fits all Planogram

Doesnt fit the specific Store Layout

Planogram ends in the Bin

Store implementssuboptimal shelf layout


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ASSORTMENT

Definition:

Assortment is the process of reviewing a categoryshealth in

terms of Sales and margins. This is a periodic method useful

to weed out non performing products and make way for new

products.

Tool used for this isCRMor Category Role Matrix


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The process of managing items in a product category as a

SBU by determining pricing, merchandising, promotions and

product mix based on

Category goals

The competitive environment

And consumer behaviour.

CATEGORY MANAGEMENT


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Uses category profitability to frame the categories within astore

Other factors are important, but profitability and salesvolume/valueare the most important criteria for managingand measuring category performance.

CATEGORY ROLE MATRIX


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CATEGORY ROLE MATRIX

Flagship Cash Machine Maintain &

Grow

Core Traffic Under Fire Rehabilitate

50 % 80 %

Cumulative Sales (%)

GM%Avg GM %


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NEW PRODUCT INTRODUCTION

Process note

Periodic review mechanism for new products

Reasons can be many

Big Launch by concerned FMCG

Innovative

Big brand

Attractive margin

Good promotions


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PROMOTIONS

Price offers

Value offers

Cross promotions

Bill discount

Scratch / coupon offers

Multi pack promotions

Loyalty programmes


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PRICING

The importance of pricing decisions is growing today

because customers are looking for good value when they

buy merchandise and services.

VALUE is the relationship of what the customer gets to

what she has to pay for it


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PRICING

Retailers have responded to customer needs with

Discount chains/stores offeringeverydaylow prices

(Wal-Mart, Buy nSave stores)

Supermarkets offering a more aggressive pricing strategy

with a large share of products being offered ondiscounts.

(Foodworld, Food Bazaar, More )

Premium storesoffering high quality/service ( Shoppers

Stop, Mom & Me, Mainland China)


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PRICING STRATEGIES

Everyday Low Pricing

The term EDLP is a misnomer, low does not always mean

lowest .

This strategy could more accurately be called everyday same

prices,because prices donthave significant fluctuations.


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PRICING STRATEGIES

High / Low Pricing

This strategy typically describes a sale driven format.

The retailer offers not necessarily the lowest price, but uses

advertising to promote the Sale.


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APPROACHES FOR SETTING PRICES

The 3 different approaches to set prices are

Cost oriented method

Demand oriented method

Competition oriented method


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APPROACHES FOR SETTING PRICES

Cost oriented method

The retail price is determined by adding a fixed percentage

to the cost of the merchandise.

Demand oriented method

Price is based on what the customers expect or are willing to

pay.

Competition oriented method

Price is based on the competitors prices


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TOPICAL PRICING STRATEGIES

HAPPY HOURS

DIFFERENTIAL PRICING - STORE SPECIFIC

DIFFERENTIAL PRICING - PERIOD SPECIFIC


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STOCK MANAGEMENT

Efficient stock management is one of the key parameters

differentiating a successful retailer from a not-so-successful one.

Key is to :

Avoid stock outs

Avoid overage stocks


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STOCK OUTS are an absoluteNO-NOfor any store.

It not only leads to sale loss but also customer dissonance

A good Merchandiser will try and avoid stock outs as far as

possible by end to end tracking of

Fill rates by supplier to warehouse

Fill rates for warehouse to stores

STOCK MANAGEMENT


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OVERAGE STOCKS are equally bad for a retailer. They not only

suck up precious working capital, but also end up as non

saleablestocks on the shelf.

The trick lies in not having paid-up stocks, but managing

the credit period to effectively rotate stocks.

STOCK MANAGEMENT


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Madhumita Mohanty

Thank You

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Session Merchandising

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